In the nine years that Leslie Susan Stehr worked at First National Bank of Montana, she siphoned off more than $800,000 in cash from the vault, adjusted the bank ledgers to avoid being caught, and frittered away every last penny on bills, lavish gifts and holiday vacations.

Before going to prison this month, the 45-year-old woman lost her truck because she couldn’t make the payments. The judge who sentenced Stehr to a term of three years and eight months observed that she had no money to make restitution payments, or even pay standard court fees, though he still ordered her to repay more than $1 million.

Federal investigators were astounded that the money could be squandered without a trace, and even Stehr’s defense attorney couldn’t divine an argument to justify her extravagant spending when he asked for a non-prison sentence.

But members of Montana’s banking and finance community were most incredulous – not only that the money was all gone, but that the brazen thefts went undetected for so long – and speculate that Stehr would have been caught sooner if bank managers had employed basic “popsicle stand” management techniques.

“It defies reason,” said Charles Anderson, a former bank president of First National’s Butte branch. “Eight hundred thousand dollars is a staggering amount. You never see a situation like this that is carried out over a period of time and goes completely undetected. It should have been discovered a heck of a lot earlier than it was, and the bank contributed to the offensiveness by allowing it to happen.”

The stealing first came to the attention of bank officials in February 2008, shortly after the old guard of management was overhauled and safeguards protecting against theft were put into action. At that point, however, Stehr had been working for and stealing from the bank for nine years.

“That’s a very exceptional situation, where something would extend over that period of time,” Anderson said. “Should it have been caught? I’d say absolutely. Was it the bank’s fault? No, because she took the money. But was there contributory negligence on the bank’s end? I can’t sit here and with any amount of candor say there was not.”

Adam McQuiston, market president at First National Bank of Montana, took over as manager in 2007. Although he declined to point fingers or blame the previous management team, he said the thefts became apparent shortly after he modified some basic banking procedures, such as how much cash the bank keeps on hand.

“We began looking at the levels of cash we carry in the bank at a given time and decided to liquidate some of it,” he said. “Basically, the more cash you have sitting around in the vault, the less cash you have out there earning interest. It becomes a non-earning asset. We were evaluating that when this thing began to unravel.”

Less money in the vault also makes it easier to monitor cash levels for theft and robbery, he said. Even though Stehr was keeping false records and adjusting the cash count daily to match the amounts in the general ledger, the missing money would have been obvious with a more manageable amount.

Once the cash was liquidated, however, it was obvious that the actual vault money was less than the ledger, and “the jig was up,” McQuiston said.

“We were selling a large portion of the cash from our reserves because we thought we had too much,” he said. “At that point it became impossible for her to circumvent the procedures. The time had run out.”

Stehr was hired at the Missoula bank in February 1999 and worked at branches both on Brooks Street and Higgins Avenue. She began embezzling money from the bank in November 1999, using her position as teller supervisor and vault supervisor to manipulate the bank’s records and figures and adjust them to match the vault numbers. First National Bank conducted surprise vault counts on a regular basis, but did not discover Stehr’s embezzlement because she adjusted the cash count.

After the thefts were uncovered, investigators learned that Stehr had stolen money from two previous employers, but those thefts went unreported, both to law enforcement and to her future employers.

“With some of these repeat offenders, they become as good at embezzling these funds as they are at doing their jobs, if not better,” McQuiston said. “Unfortunately, the guy at the end of the line ends up holding the bag, and in our case it was a pretty big bag.”

“The math is pretty staggering,” he continued. “This embezzlement started at the Brooks Street branch and began in very small increments. As she realized that the oversight at the time was not what it should be, she became gutsier and gutsier as she went along. She didn’t just go into the vault one day and grab a wad of cash. She did it over a long period of time and she kept taking larger and larger amounts.”

“It’s hard for me to understand how someone could spend that kind of money, but it looks like that’s what happened,” he said.

Tom Swenson, who founded Bank of Montana in Missoula, said embezzlement cases such as Stehr’s put the entire banking community on guard and raise vigilance among bank managers.

“It definitely brings the issue to the forefront with banks and local bank auditors,” Swenson said. “It just becomes a topic of regular discussion. Not only is it a blemish on the face of banking and to First National, but also on the auditors. You have to imagine different scenarios in which these things could happen.”

In the case of First National, there were both internal and external audits in place – or dual controls to prevent such thefts – but the stealing went unnoticed because nobody was physically counting the vault money.

“I examine cash every day,” Anderson said. “Anyone who looks at cash on a regular basis, you know that you only keep so much money in cash in the vault. You don’t carry a million dollars in cash. Banks carry maybe $200,000 or $300,000.”

McQuiston said the thefts have forced him to pay close attention to embezzlement cases across western Montana, and that he watches every blip on the radar screen. It also reinforces his belief that banking procedures need to be constantly developing and flowing rather than inactive and stagnant.

“When I took over I never expected to find this, but when you have the same procedures in place for long enough you can find a way to circumvent them, which is why your procedures should be ever-changing,” McQuiston said.

First National Bank is a Montana-owned independent bank with more than $280 million in assets and 11 offices in Montana and about 125 employees, with its corporate headquarters in Missoula.

Reporter Tristan Scott can be reached at 523-5264 or at tscott@missoulian.com.